ExxonMobil has told Kazakhstan that its giant Tengiz oil field will peak next year and then decline nearly 40% by 2035. The company says other projects, from Kazakhstan's Kashagan field to the Permian Basin and two LNG developments, can offset the drop.
ExxonMobil has warned Kazakhstan that Tengiz, the country's largest oil field, will peak in production next year and then decline nearly 40% by 2035 to around 500,000 barrels per day. The slide also affects Chevron, which holds a 50% stake in the Tengizchevroil partnership that helped develop the field.
Kashagan offers a path to replace the lost barrels
Exxon has another option in Kazakhstan. Kashagan, an offshore field in the Caspian Sea operated by a consortium that includes Exxon, Shell and TotalEnergies, could support an $80 billion joint investment that would add up to 600,000 barrels per day of new output. However, the partners won't commit that capital until they resolve a dispute with Kazakhstan's government. Kazakhstan has levied a $5 billion environmental fine that the field's operator hasn't paid, and it separately claims $150 billion in lost revenue tied to development delays, a matter now before international arbitration.
The Permian and new LNG projects carry the rest of the growth plan
Beyond Kazakhstan, Exxon is spending $100 billion through 2030 on major capital projects meant to lift total oil and gas output from 4.7 million barrels per day last year to 5.5 million barrels per day by 2035. The Permian Basin is central to that plan: Exxon expects to double its production there by 2030 to about 2.5 million barrels per day, backed by new 20-year midstream agreements with Targa Resources covering three new gas processing plants and a 70-mile gas pipeline due to start operating in the first half of 2028.
Exxon is also building out natural gas supply through liquefied natural gas projects. It recently awarded $1.1 billion in pre-investment contracts for the Rovuma LNG project in Mozambique and expects to reach a final investment decision on the potential $30 billion project by the end of this year. Exxon could also approve a separate LNG project in Papua New Guinea within the same timeframe.
Rovuma still carries risk: regional violence has delayed the project since 2021. Even so, Kashagan and the Permian build-out give Exxon room to keep replacing Tengiz's lost barrels.
Source: The Motley Fool
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